About 70 per cent of households, industries, small and medium enterprises, and general businesses could access more affordable and reliable electricity by 2018, thanks to a new financing agreement between the government and the African Development Bank (AfDB).
The new concessional loan, worth $40 million (about Rwf27 billion) signed yesterday in Kigali, will fund the construction of 119 kilometres of transmission line from Rusumo Power Plant to Birembo substation in Kinyinya, Gasabo District, through the proposed Bugesera International Airport substation, Amb. Claver Gatete, the minister for finance and economic planning, said.
The project is part of the plan to support Rwanda’s electricity access programme from the current 17 per cent of households to 70 per cent by 2018.
“Increased electricity access will create employment opportunities, increase off farm jobs, contribute to industrial development and reduce production costs through decreased electricity tariffs,” Amb. Gatete said.
The minister said the loan will be repaid within 40 years with an interest of 1 per cent in the first 10 years and 3 per cent in the subsequent years.
“The loan comes at time when government is scaling up efforts to address the challenge of electricity, we are very much aware that we can’t have economic and rural transformation without electricity,” he added.
Negatu Makonnen, African Development Bank country representative, said the bank’s support will directly contribute to Rwanda’s objective of sustained rapid economic growth and facilitate the process of economic transformation as prescribed in the second Economic Development and Poverty Reduction Strategy (EDPRS II) agenda.
“The support will help increase the country’s renewable (hydro) electricity supply capacity to address the power deficit and allow expansion of energy access rate. It will also provide the opportunity to replace high cost thermal plants from the power systems, thereby lowering the cost of power generation,” Makonnen said.
Rusumo Falls hydroelectric power plant is a regional project shared by Tanzania, Rwanda and Burundi that is projected to generate 80 megawatts that will be equitably shared among the three countries–each country will have a share of 26.6 megawatts.
The World Bank will finance the power plant with an amount of $340 million, while AfDB will finance transmission lines in the three countries.
AfDB also finances the electricity access rollout programme with total financing of $43 million. The bank is currently financing 23 projects to a tune of more than $500 (about Rwf340 billion) within infrastructure projects taking the lion’s share of over 60 per cent of the entire financing.
The Director General of Energy Water and Sanitation Authority, Ntare Karitanyi, said the loan will help increase electricity production from current 110 megawatts to about 563 megawatts by 2018.
According to statistics from Ministry of Infrastructure, government needs investments worth about $3 billion (about Rwf2 trillion) to increase access to water from the current 74 per cent to 100 per cent and access to electricity from 17 per cent to 70 percent by 2018.